SWP 14/91 BULGARIA,
PERESTROIKA,
GLASNOST AND MANAGEMENT
LEN HOLDEN and HELEN PECK
Cranfield School of Management
Cranfield Institute of Technology
Cranfield
Bedford MK43 OAL
(Tel 0234 751122)
Copyright: Holden and Peck
A later version of this paper has now been published in European Business Review, Vol90 No 2 with
the title: “Perestroika, Glasnost, Management and Trade”.
BULGARIA,
Recent
headlines.
PERESTROIKA,
developments
Under
in
GLASNOST
Eastern
Europe
AND
MANAGEMENT
have
spectacularly
caught
the
the banners of Perestroika and Glasnost, the peoples of eastern
Europe have expressed their desire for greater freedoms, not only in the political
also in the economic sphere.
point up the inefficiencies
Long queues in front of virtually
but
empty shops starkly
of the economic system of countries
in Eastern Europe
such as Bulgaria.
Leaders and experts in Eastern Europe want to remedy this situation
there
have been moves to forge
enterprises
education.
Bulgarians
(joint
ventures)
Cranfield
links
with
industrial
and seek the expertise
for example, has recently
and the Robert
Maxwell
and commercial
of institutions
agreed a joint
Organisation.
and
Western
of management
contract
with
The School also has links
the
with
Hungary, one of the most progressively westernised of the Eastern bloc states.
In the wake of events in Poland and East Germany,
the Bulgarians too have
ousted their long standing leader Todor Zhivkov
and began a series of reforms.
paper attempts
these developments
to give some explanation
for
with
This
particular
reference to Bulgaria.
Bulgaria has a population
Turks,
Gypsies and Greeks.
bounded by Turkey
of 8.9 million
a significant
of whom are
It is situated to the west of the Black Sea, and is
and Greece in the South, Hungary
and Yugoslavia to the West.
minority
and Rumania
to the North
It has fertile
agricultural
land producing
maize, vegetables and Mediterranean
supplied
an internationally
fruits,
plentiful
including
crops of cotton,
tobacco,
grapes, the last of which
successful wine export business.
However,
rich in natural resources and until the 1950’s the predominant
has
it is not very
occupational
sector was
agriculture.
In
Bulgarian
1949 the Communist
Government
whereby
the
economy was to be weaned from its ‘over dependence’ on agriculture
and
base. The land was nationalised
was to develop a heavy industrial
This
was a formidable
Predictably
which
set up the apparatus
task as it was divided
the agricultural
policy
into
and collectivised.
1.I million
private
holdings.
gave rise to serious social and political
was only suppressed by methods reminiscent
unrest
of those used by Stalin in the
1930’s.
After
the death, in 1949, of Georgi Dimitrov
communist
state), the leadership
Chervenko,
who continued
The element
manner.
(the founder
of the post war
passed into the hands of the pro-Stalinist
the industrialisation
policies
in a vigorous
to speak out in case they found
contravention
The best protection
of the Party line.
member,
and between
15,000 to 460,000.
too ready
ambitions.
1944 and 1948 Party membership
the Party
The Bulgarian
line
dissident
and discredit
writer
Georgi
themselves
in
was to become a Communist
Many of these new members were aparatchiks
to endorse
and brutal
of fear thus created posed a huge obstacle to democratic
change as people were reluctant
Party
Vulko
rivals
figures
and careerists, only
to further
Markov
rose from
vividly
their
own
describes such
people:
“Uneducated,
half
literate
and
intellectually
suddenly found themselves occupying
important
Party
in the spirit
connections,
Innumerable
and yet entirely
posts purely
I collided
with
unbelievably
directors,
heads of sections and ministerial
still remember their legendary inanities.
decisions
on complex
obedient, blind instruments
mediocre
of overall
Party
policy.
and later middle
and entirely
department
citizens
because of local
times in my own work (as a shop floor worker
manager)
or taking
insignificant
inadequate
chiefs.
My colleagues
Incapable of thinking
for themselves
questions
of production,
of those who had appointed
they were utterly
them.”
He continues
“For many years they ruined
lack of experience
whole industries
and, above all, dishonesty
with
their
incompetence,
and selfishness.
They
greedy, avid for success and did not spare either people or materials
to be able to report some supposed achievement,
to be either
price.” (1)
a fraud
which eventually
or else to have been attained
at much
A society permeated by fear and distrust creates a conspiracy
such an atmosphere does not allow critical
faced.
If the problems are not publicly
them.
In this fashion a self perpetuating
were
in order
turned out
too high
a
of silence and
appraisal of the problems with which it is
recognised then it is impossible
bureaucracy
to remedy
contains its problems
through
force, like a lid on a pressure cooker.
The second major
problem
which
ideolo gical base from which flowed
hurried
industrialisation
other communist
afflicted
all political
of the Soviet Union
states.
power in 1956 slavishly
Chervenko
Eastern
economic
Europe
was the rigid
decision making.
Stalin’s
in the 1930’s became the model for all
and his successor, Todor Zhivkov,
who came to
emulated the Soviet model despite its limitation
for Bulgaria
which lacked the necessary raw materials for heavy industrialisation.
A
series of
predominantly
five
industrial
year plans
country,
turned
Bulgaria
an agricultural
1934
1956
1983
Agriculture
69%
70%
2 1%
Industry
14%
16%
45%
As the agricultural
the iron and steel industry
Distribution
in a concerted way in the 1970’s. Bulgaria lacks sufficient
on imported
foreign
on long employee
and embark
invest huge capital sums in the infrastructure
A similar
in Bulgaria
sector declined in relative terms plans were made to enter
iron ore and is largely reliant
expertise
to a
as the table below reveals.
Occupational
.
from
scheme was developed
sources.
There was a need to ‘buy in’
training
programmes,
of such an ambitious
in the oil industry.
as well as
enterprise.
Bulgaria
was totally
reliant on subsidised oil imports from the Soviet Union
and yet it set up a huge oil
refinery
pollutes
near Burgas on the Black
Sea, which
now
large areas of
the
surrounding
shoreline.
These enterprises were developed when world markets in both
these areas were plummeting.
Agricultural
exports were used to prop up these disastrous schemes often at
the expense of the Bulgarian
shops to further
people who saw food produce ‘disappear
consequence of such a system was the development
economy where official
currency
In such an underground
system barter and ‘favours’ play an important
Union
it is called
Managers
connections.
which
exchange rates were far below black market rates.
‘blag’ and in Bulgaria
and workers
would
‘vruska’,
appropriate
further
up the waiting
society
and throughout
workable
list for a new car.
various
In the
means ties or
useful
products
Eastern
by a network
appointment
network
Favours
office
in return for being put
Europe.
In essence the system
of clandestine and often illegal and corrupt
was only
made
practices in which
state were involved.
Thus the
of a manager meant that his or her success was as much reliant on their
of
knowledge
influential
acquaintances
and
contacts
as the
required
skills
and
of the jab.(2)
Combined
products
to
Such a system operated in all levels of
the lowest and the highest members of the communist
with
and erratic
or enterprise
these influences
delivery
was a general
of supplies.
had to fulfil
often unrealistically
became past masters of the manipulation
overfulfilment
of plan targets.
Markov
malaise
of
poor
quality
In the face of all these problems
who usually did not take into account supply shortages.
factory
which
role.
for other favours or goods. For example, a butcher might keep special
cuts of meat for a person in a car enterprise allocation
factory
of a second
they had access and use them as barter for items in short supply.
were returned
their
the export drive to pay for these industries.
The third
Soviet
from
high targets set by planners,
Not surprisingly
managers
of statistics in order to display fulfilment
testifies
the
of his experiences
or
in a Bulgarian
in the 1950’s:
“During
that time I learned an unwritten
your work, the important
all sorts of production
Haraszti,
Hungarian
eastern European
In order to report an overfulfilment
targets were deliberately
factory
states.(5)
to finish
tricks, the gist of which was to report on work which
the Hungarian
engineering
‘It is not important
thing is to render an account of it!’ This rule led to
had not been carried out.
the production
works. 43)
rule.
dissident
writer,
of the plan,
set well below the capacity
attests to similar
of the
practices
in a
in the 1960’~(~). This example can be replicated
in all
The system was as much entrenched
in Bulgaria
in the
1980’s as it was thirty
against the quality
years before if we are to believe Zhivkov
of Bulgarian
Even foreign
in a speech railing
goods. (6)
products
manufactured
under
licence,
in some of the joint
ventures, he said, had been ‘Bulgarised’ - a word which in essence has come to mean
low quality
production.
Zhivkov
the lack of incentive.
deeply rooted,
blamed poor controls,
Although
weak labour discipline
and
such reforms were needed, the problems were more
and would mean the denial and criticism
of policies
that he himself
had played a major part in creating.
The lack of motivation
Eastern Europe.
Incentive
was well known
in Bulgaria
in a way in which
workers
with a consequent lack of quality.
All enterprises
Basic wages were set at a low level so that the worker
skillful
who set the targets for each work
“But the norm was not something
to
had their ‘norms’
individual.
overfulfilled
specialists,
to exhaustion
staffed
the norm.
with
could work
departments
fulfil
and
systems did exist in the form of bonus payment schemes,
but they were operated
increase output,
of the workforce
group and
had to strain to
permanent:
as soon as it was
by ten per cent, that was the signal to raise it. ‘t(7)
Stronger and more
workers annihilated
the weaker and more clumsy ones, as the Stakhanovites
had done in Stalin’s Russia.
What of the trade unions?
rights?
The main reason was that although
independent
officials
representatives
and
Kazakhstan
managing
explained
simply not defending
now
Why did they not attempt to protect the workers’
of the workforce
directors.
during
miners
in
Western
“Trade
Siberia,
Unions
by
and
organisations
. . . and
are
often
should
responsible
laid
to
the
local
by Party
Donetz
and
in many areas are
their members . . . In fact, trade union committees
controlled
. . . (unions)
in reality they were appointed
last year’s strike:
been
injustices
As
trade unions appeared on paper to be
have up to
Communist
open
to
accusations
of
be independent
of
the Communist
Party
favouritism
Party
or
and the
Government.“(8)
It is interesting
mining
to note that workers
are more militant
than in other
reasons for this is the inability
extent,
services.
for
example,
in the heavier
economic
industries
such as coal
sectors and one of the major
of miners to engage in ‘blag’ or ‘vruska’ to the same
as shop workers
who
have access to consumer
goods and
-’
.,.
.
,.
_
:
:
.
,*
./.
,~
-.
.
.-“.,L.;_
.
:
Attempts
at reform
were made on many occasions in Bulgaria
Europe in the 1960’s and the 1970’s with periodic purges of corrupt
figures,
but these failed
restructure
to have any lasting
work organisation
effect.
and Eastern
Party and public
Endeavours
were made to
under the Brigade system in the 1970’s but -economic
slump in the early 1980’s undermined
these radical reforms
in Bulgaria.
The basic
idea was considered a good one, however, as it was felt that greater democratisation
and allowance for group and individual
in the work place could improve
Even the failed, previous experiments seemed to indicate this.
quality and output.
The Brigade
initiative
System
The major Bulgarian
reform
was to introduce
form of a counter plan devised by the workforce
targets
addition,
beyond
the plan which
were created
‘planning
from
below’ in the
which would allow them to devise
and controlled
by themselves.
workers’ and managers’ wages and salaries were linked
In
to performance.
This was known as the Brigade System and its roots go back to the Soviet Union in
the 1920’s. The new type of Brigade was “to operate on the principle
accounting” and the money earned would be distributed
qualifications
and the personal contributions
be on the economic criterion
of internal cost
by the Brigade according
of every member.
to
The emphasis was to
and quality of production. (9)
of efficiency
A Brigade, on average, is made up to 50 to 70 workers, and each enterprise is
divided
into such brigades.
Obviously
plant.
In very large organisations
there is variation
in size depending
brigades could contain
on the
as many as 200 to 300
workers, and in smaller enterprises more commonly, 20 to 50 workers.
All Brigade members make the Brigade Assembly
leader annually,
as well as a Brigade Council.
Safety Representative
the same membership
which elects the Brigade
The Shop Steward (Profgruporg)
and
are elected by the Trade Union Assembly, which in effect has
as the Brigade
Assembly.
The Brigade
Party
Group,
ie
Communist Party members, also have the right to elect a Brigade Party organiser, but
neither
the Brigade
Party
organiser
nor shop steward
have the power
over
the
Brigade Leader.
The reformed
and given further
Brigade system was widespread in Bulgaria by the m id 1980’s
backing by the economic reforms introduced
in January 1987.
The aim of the new Brigade was to create incentives without exploitation,
involvement
without
alienation.
The
Brigade
existed
to
promote
and
collective
‘,
..
‘,
I,
‘_
consciousness and responsibility
while at the same time rewarding
Thus the five major functions
individual
effort.
of the Brigade were seen to be:
1.
Overseeing and enhancing production
2.
Responsibility
3.
Integration
of tasks
4.
Feasibility
of accounting
technology
for machinery
for results so that they can be attributed
to
the Brigade
The recognition
5.
The Brigade
management,
of the Brigade as a social as well as a production
also has rights in approving
rules and regulations,
the counter
distribution
unit.
plan, agreements
of earnings,
disciplinary
with
measures
and the admission and dismissal of workers to the Brigade team.
In this way, it is hoped that the improvement
would
make for an improvement
Brigades,
for example,
materials
and regularity
members responsible
maintained
bringing
would
in the quality
in the quality
and quantity
of working
of supplies.
By making
for machines this would
reductions
in maintenance
The
of production.
put pressure on managers to ensure the flow
the Brigade
life
of raw
and its individual
assure that they would
be carefully
costs and loss of production
due to
breakdown.
The system has only
,
recent events have overtaken
been in widespread
use for less than two years and
these attempts at reform
within
the communist
regime.
There has been a demand for market economy
policies of the type in practice
Western Europe,
will be assured, and the shops will
be filled
the belief being that prosperity
with consumer goods so enticingly
The initial
euphoria,
however,
on display in Western shopping malls.
is beginning
appraisal of the glasnost economies is taking place.
the task is the first stage followed
Czechoslovakia
restraints
which
to wear off and a more realistic
Recognition
of the enormity
into
a West Germany?
the Communist
also the restrictions
of
by a down to earth assessment of the capabilities
Is it possible that Poland can turn into a Belgium
of the economy.
in
This is improbable
not only
overnight
due to the
regimes of the past imposed on the economies
.
of the present potentialities
of the economy.
or
but
Bulgaria
and Romania are, for example,
primarily
Both countries
agricultural
have extraordinary
at least not heavy industrially
based.
and have therefore,
the ability
not only to feed their relatively
provide
exports to fund other enterprises;
agricultural
be compatible
to the natural proclivities
on imports
but these enterprises
of the economy.
world market dominated
of raw materials
by Germany,
certainly
‘Third
needs to be less theoreticially
industries
already made an attempt
The curriculum
c
competitiv
workforce,
based and more practically
such as computers
orientated
toward
Bulgaria
and electronics.
market but lacks quality
hardware needs more quality
but thi
for schools and college
It still does not have the abilities
the chips and the electronic
need t
in any economy whit
and is part of an extremely
to enter the computer
in both hard and soft ware.
bt
Japan, USSR and USA.
- educated for what?
Wave’ newer
Ian
Thus the manufacture
Bulgaria could, like Japan, make use of its well-educated
begs the question
fertile
c
small populations
iron, steel and chemical petrol products is counter productive
relies heavily
economies,
ha
productiol
to produce silicon fo
control to assure reliabilit:
and user friendliness.
Another
major
change attitudes
and favours
However,
problem
in working
will
presently
grossly
underestimated,
and managerial
practicies.
have to go if an efficient
economy
initiatives
is the need tl
The system based on barte
is to be remotely
in changing social attitudes are notoriously
difficult
achievable
as there an
often too many vested interests in the old system.
In addition
Under
industrial
iniative
and responsibily
the old system employees
throughout
for .if they were wrong
they would
decisions
would pay a heavy price:
and even political
including
highly
to attempt
brave individuals
get blamed,
It is not surprising
placed managers and directors
to work
an increasingly
need to be encouraged
the workforce
the loss of job, the ruination
castigation.
will
were loathe
and in making
to tak
mistake
of career prospects and socia
that
most of the workforci
kept their heads down and continue
moribund
system.
No one welcomes
I
who pointed to the absurdities even though much of what they saif
was true.
Many
downfall
western
have also not been helpful,
all economic
markets, advocating
restrictions,
a vindication
Groups of experts trooping
institutions.
setting up of stock
system.
commentators
of the Soviet system or claiming
western political
d
the fe
To change overnight
understanding
into a western
over th
of the free market
over to Poland advising
wholesale privatisation
show very little
crowing
and the loosening
of the Eastern
style economy
would
be
difficult
and even if it were possible such delights
and the creation of an underclass, would inevitably
as a resurgence of nationalist
Already
a back-lash
people
are bitterly
empty,
as high unemployment,
poverty
result, along with such spin offs,
demands.
to the ‘89 revolution
commenting
is apparent as the shops still remain
that “at least under
Breshnev
there
was
wholesale
like some
enough food in the shops”, and that “you can’t eat glasnost”.
Solutions
cannot be packaged in the west and bought
panacea.
There are also economic and cultural
different
traditions
and weaknesses.
strings!
and attitudes
differences
to Poland as well as different
What the West can do effectively
This would
to consider.
is offer
not only help the delicate newly-found
create a much more positive atmosphere of cooperation
Bulgaria
economic
has
strengths
financial
aid, without
freedoms
to grow, but
between East and West. That
would be progress indeed!
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